Thursday, August 20, 2009

New Changes in effect today for Credit Cards

Credit card companies have tried to weather the new credit card laws with closing down accounts and slicing credit limits in half. Customers are now armed with new rights, which grant them the ability opt out of a credit card agreement, and just pay off that amount using the old terms and interest. The obvious drawback is that the credit card accounts will remain closed and only active for making payments toward paying off a balance.

Customers now have 45 days instead of 15 days to be notified of such credit term and interest changes. Whether the new credit laws will help consumers is going to take time, as credit card companies have to make adjustments to redirect their credit card solicitation practices.

The Federal Reserve and government bank regulators are enforcing new laws to settle the credit card companies from taking advantage of the consumers. There are rules and guidelines that consumers must follow to retain such rights.

The Credit Bureau Agencies make it hard for consumers to acquire credit due to maintaining high standards for determining credit scores. When a consumer applies for new accounts, companies process the amount of credit to credit limits. There is also a income to debt ratio, which alerts a company of a consumers risk in paying back a loan.

Having less than 50% balances, paying more than minimum payments on each account, and avoiding low balance credit cards are common indicators for improving credit. With the new changes in store, consumers have to be aware of slashed credit limits, closed accounts, and high interest rates.

Banks influence consumers in extending loans for home and car purchases because of their guidelines in maintaining an extensive credit history. If credit card customers are making decisions to close down account or trim credit limit, then a customer that normally rests their balance at the 50% mark may soon come closer to the 90% percentile of their limit. These changes are sure to appear on a credit report.

Hopefully health reform doesn't travel in the same direction credit card reform. This is the main reason that Chase decided to close down accounts of customers that have been in great standing. Many credit card companies tried to prevent from losing out on future interest.

The best strategy to avoiding credit card issues are to keep your balances below, pay more than the minimum, spend and pay off balances before the due date, avoid withdrawing cash off of credit cards, and don't try to survive on credit cards. Follow these approaches and you shall be fine. Read the MSN article below to find out whether the new credit card changes will affect you.